$110m council loan backs Picton port rebuild for new ferries

The Marlborough District Council has agreed to lend its port $110 million for the region's share of the Picton redevelopment in preparation for the new Cook Strait ferries.

The council consulted with the community on the loan, with more than 80 per cent of submitters in support of the proposal to lend the money at a lower rate though the Local Government Funding Agency.

The redevelopment will result in a new wharf built to accommodate the larger rail-enabled ferries, new linkspans and walkways to connect the ferries with landside infrastructure, and a new overbridge at Dublin Street to separate road and rail.

The work in Picton is estimated to cost $531m and be completed by 2029. It is part of the $1.867 billion Cook Strait Ferry Replacement Programme.

The council had previously agreed to lend the port the same amount under the now canned iRex (Inter-Island Resilient Connection) project.

Mayor Nadine Taylor said the project was a significant investment in the port that would secure a "home base" for the new ferries.

"This loan is an investment in Marlborough's future. There's much work to be done in the port and in the town of Picton over the next three years."

Public consultation had shown broad support for the project, with many stating the importance of the transport link between the North and South islands and the economic benefit to the region.

Concerns centred on the financial risk, the council's role in providing finance, possible future changes in ownership or operator performance and the structure of the loan.

At a council meeting on Tuesday, Port Marlborough chief executive Rhys Welborn said the Picton wharves were built in the 1960s and were in need of substantial upgrades for the large ferries.

Welborn said the port's contract with KiwiRail expired in 2029. Without the council's investment, Picton could lose the inter-island trade. The new agreement secured ferry operations in Picton for the next 60 years.

"It's a good example of how local and central government can co-invest in nationally significant infrastructure," he said.

"There's over a million passengers; 400,000 vehicles; over 3 million lane metres of freight; around $14 billion worth of freight that goes through Picton every year. It is absolutely integral to the Marlborough economy and specifically Waitohi Picton."

He said there was no cost to the ratepayer as the port was borrowing from the council via the Local Government Funding Agency at a rate that would save millions of dollars over the life of the lease.

The port will pay back the loan, including interest, while also paying its annual dividend to the council. There was also a security package that included a financial guarantee and a bond equivalent to six months' lease payments and operator fees.

Sign up for Ngā Pitopito Kōrero, a daily newsletter curated by our editors and delivered straight to your inbox every weekday.